Free Enterprise And Free Education

Higher education in the United States, as everyone knows, is a field in which private institutions are engaged in a desperate struggle to hold their own against the competition of the heavily subsidized state run multiversities. In this business, just keeping your head above water is a tough assignment. After all, how long do you think a private barber shop or restaurant could stay in business faced with state financed competitors, where the customers did not have to pay for their purchases, the producers did not have to sell their products, and the owners (taxpayers) exercised only nominal and sporadic control?

The system under which higher education is organized and financed in this country has had widespread and deleterious effects on the quality of the services rendered. The first effect is the most widely publicized. The low cost of matriculation has meant that our colleges and universities have been filled with a flood of “students” who value the education relatively little by comparison with alternative pursuits, but are willing to drop in and see the show given a sufficient subsidy. If they take it into their heads that they don’t like what they see, they lose next to nothing by shutting the school down or tearing it up. Faculty members, whose paychecks keep rolling in strike or no strike (and think of all that extra time to devote to publications!) hardly have an interest in standing up to the students, and the result is chaos.

The second effect is perhaps less widely known, but even though less spectacular is equally disturbing. According to a study reported in the New York Times of July 19, our institutions of higher education are year by year becoming more uniform, more like one another. Anyone in academic life is familiar with the pressures in any college which tend to work against diversity of political views, teaching methods, life styles, etc. within a given institution. The chief redeeming feature of the system heretofore has been the great range and diversity existing among institutions. Now, it seems, this diversity is gradually being nibbled away by the pressures of the system.

The third effect of the organizational and financial peculiarities of American higher education is, however, the most serious of all. It has, in fact, contributed substantially to the other problems just mentioned. Faced with the overwhelming financial pressures generated by the competition of state subsidized institutions, almost all of what we nominally call “private” institutions have swallowed hard once or twice, and then put their hands out too. Building grants, research grants, development planning grants, matching grants, travel grants, and above all, the half-hidden grants implicit in the tax deductibility of alumni contributions have flooded in, each with its attached earmark, restriction, provision, loyalty oath, reporting procedure or other string by some other name. A lucky few have become rich, powerful clients of the state and are able to throw their weight around a bit in Washington, but most, like the welfare poor, have been given just enough to stay alive in a state of abject, impoverished dependence.

Against this bleak background, Royalton College of South Royalton, Vermont stands out in startling contrast, incorporated in 1965 as a proprietary, stock corporation, with its President and Director the principal stock holder by virtue of ownership of all but two of 2000 shares, Royalton College has never accepted aid from the state in any form (although it has from time to time accepted students who in turn have, as individuals, accepted government assistance in the form of veterans’ benefits and the like). Royalton College has not even accepted the indirect subsidy of tax-deductible contributions since, although it has never in fact made a profit (for reasons which will become clear below, not by intention) and has amended its articles of association so that any potential profits would automatically be plowed back into improvement in its educational facilities, it has refused to reorganize as a non-profit institution.

In 1967, the College received a visiting committee from the board of higher education. On the basis of the enthusiastic report that committee concerning the high academic achievements of the infant institution, the board voted to give the college the power to grant four year degrees. This privilege was accomplished by a list of 17 conditions to which the college must adhere, but since these conditions related only to the type of academic qualifications which would be the concern of any certifying agency public or private, the college agreed to them.

It was too much to hope, however, that the state would permit a wholly free and independent institution to exist peacefully and grant degrees within the realm of its authority. In 1968, less than a year later, some reports appeared in the local yellow press questioning the advisability of permitting education to be conducted by an institution with Royalton’s unique (unique in the educational world, that is) financial organization. The board of education panicked, sent another visiting team, and, on the basis of the college’s financial structure, suspended its degree granting powers.

At this point, the school filed suit to nullify the suspension. The argument was made that the degree granting powers were essential to continued operation of the college, and especially that suspension of the powers once granted was much more damaging than would have been a delay or refusal of the original grant of certification. It was contended that the action of the board was unreasonable, arbitrary and capricious, constituted a breach of contract, and violated the college’s rights to equal protection and due process as guaranteed by the federal and state constitutions. The petition of the college was sustained by the Vermont Supreme Court, and the order of the board was vacated. The grounds of the decision, however, were relatively narrow. The court based its action on the fact that nothing had been said about the school’s finances that in the future, the board might decide to refuse certification of some other institution solely on the basis of its proprietary status.

Meanwhile, in the District of Columbia, another case was making its way through the courts that was to provide a direct test of this important principle. The school involved in this case was Marjorie Webster Junior College. This institution had asked the Middle States Association of Colleges and Secondary Schools to accept an application for accreditation, and had been refused on the grounds that in order to be considered for evaluation, an institution must be a non-profit organization with a governing board representing the “public interest.” The Marjorie Webster case was brought under the Sherman Anti-Trust Act, on the grounds that the Middle States Association exercised a monopoly in the field of granting accreditation. Middle States argued, on the other hand, that education was not a “trade,” and that a combining to restrain the conduct of education thus did not constitute a restraint of trade. The U. S. District Court for the District of Columbia found in favor of Marjorie Webster, writing that “Higher education in America today possesses many of the attributes of business. To hold otherwise would ignore the obvious and challenge reality.”

Thus the important principle appeared to be established that an accrediting association could look only at the genuine academic credentials of an institution, and could not arbitrarily refuse even to consider a proprietary institution. The way seemed open for Royalton to make an application to the New England Association of Colleges for the full accreditation which, unlike the not nationally recognized certification of the Vermont State Board, would enable the college to be a full-fledged member of the educational community.

Once again, however, it proved too much to hope that all would be smooth sailing for proprietary education, for recently the Court of Appeals for the District of Columbia reversed the lower court’s ruling in Marjorie Webster vs. Middle States. This court, in addition to ruling that education was not part of the business world and hence outside the scope of the Sherman Act, wrote that “it is not unreasonable for Middle States to conclude that the desire for personal profit might influence educational goals in subtle ways difficult to detect but destructive, in the long run, of that atmosphere of academic inquiry which, perhaps even more than any quantitative measure of educational quality, appellant’s standards for accreditation seek to foster.”

Did it never occur to Middle States or to the Learned Judges that financial dependence on the civilian and military agencies of the state might also influence educational goals “in subtle ways” (!) and destroy academic freedom? Did they never learn in their principles of economics courses that it is not upon the charity of the butcher and the baker that we depend for our meat and bread, but upon their profit-seeking self interest? The decision of the court represents the kind of thinking that is turning all of American higher education into one giant academic soup line—the meat and bread is free, yes, but the quality???

The Middle States and New England Associations are, of course, private, voluntary, non-profit organizations, and the courts were wise in recognizing this as a factor in the case which should make them reluctant to intervene hastily or casually in their affairs. However, two aspects of the nature and activities of these associations are objectionable, I think, on strict libertarian grounds. First, the associations in question seem to exercise an effective monopoly in the area of certification. Whether or not this is a benign, “natural” monopoly, or one aided and abetted by the state is, at least, open to question. Second, and much more important, various governmental agencies concerned with education base certain actions of their own on the decisions of the associations to accredit or not to accredit. For Royalton, the most directly harmful of these decisions have not been any refusals to hand out unwanted grants or aid, but actions which have made it virtually impossible, in certain areas, for the college to help itself! For example, it turns out that foreign students cannot get permission from the State Department to study at schools which are not on the list, a matter of critical importance to a school like Royalton which specializes in international affairs.

In short, the future of free, independent, proprietary higher education in the United States looks to be trouble. The ultimate answer may be to establish a competing accreditation agency which will not suffer from the delusion that quality education must be socialized education, but this will, to say the least, take time. Meanwhile, you can do something now to help proprietary education by patronizingit. We do not need handouts; we need just a few, serious, qualified, paying students. For a catalog and a bonus copy of the details of the court cases described above, write to the Director of Admissions, Royalton College, South Royalton, Vermont 05068.

—Edwin G. Dolan

November 1, 1970 The Libertarian Forum